Business Growth and Strategy - The company reported a positive signal for its growing business in the new anti-counterfeiting product market amid the recovering consumer demand in China[9]. - The company has signed commercial contracts with enterprise users in three industries, including tea, natural foods, and beauty e-commerce platforms, indicating a diversified brand strategy for the upcoming year[11]. - The innovative anti-counterfeiting products are expected to contribute to national welfare and sports lottery public funds with each sale, enhancing corporate social responsibility[11]. - The company aims to expand its anti-counterfeiting business across regions and strengthen its marketing capabilities to capture market share[25]. - The anti-counterfeiting products are applicable across various industries, including agricultural products, cosmetics, and pharmaceuticals, enhancing market penetration[17]. - The company has signed commercial agreements with multiple industry users for its innovative anti-counterfeiting products, indicating significant growth potential in the future[16]. Financial Performance - The company recorded revenue of HKD 77.8 million for the year ended June 30, 2021, a decrease of 53% compared to HKD 165.9 million in the same period of 2020[26]. - Gross profit for the same period was HKD 20.9 million, down 53% from HKD 44.7 million in 2020, primarily due to changes in the e-commerce ecosystem and the non-renewal of service contracts[26]. - The loss attributable to equity holders was HKD 106.3 million, a 34% decrease from HKD 161.1 million in 2020, mainly due to lower impairment losses on goodwill[26]. - Lottery-related services generated revenue of HKD 1.9 million, a 62% decrease from HKD 5 million in the previous fiscal year, with a gross profit margin of 8% compared to 24% in the prior year[28]. - The "Internet+" service business saw a total revenue decrease of 90%, with solution services recording zero revenue and supply chain services generating HKD 12.4 million[28]. - Personal protective equipment (PPE) revenue increased by 97% to HKD 63.4 million, with a gross profit margin of 21%, down from 49% in the previous year[29]. Management and Corporate Governance - The management team has made strategic adjustments, appointing experienced executives to enhance the anti-counterfeiting business model[20]. - The board of directors is committed to maintaining high levels of corporate governance and emphasizes the importance of a high-quality board composition and effective accountability systems[69]. - The company has adopted and complied with the GEM Listing Rules Appendix 15 corporate governance code, with certain deviations noted[70]. - The company has a diverse board composition, including executive, non-executive, and independent non-executive directors, with recent appointments and changes noted[75]. - The company has established a code of conduct for securities trading by directors, ensuring compliance with the GEM Listing Rules[73]. - The company emphasizes shareholder interests and aims to create returns for shareholders through effective management and strategic oversight[76]. Shareholder and Equity Information - The company issued a total of 55,652,174 additional shares at an issue price of HKD 0.23 per share and 58,606,927 loan capitalization shares at HKD 0.26 per share during the reporting period[37]. - The company has no significant future investment or capital asset plans at this time, but will continue to monitor industry conditions[52]. - The company has a total of 632,920,856 shares held by Frontend, with significant ownership by Ms. Zhang and Mr. Chen[193]. - The total shareholding percentage of major shareholders indicates a concentrated ownership structure, with the top three shareholders holding approximately 41.26% of the company[191]. - The company has a profit guarantee of at least HKD 23 million for each of the fiscal years ending December 31, 2019, 2020, and 2021, or a total of at least HKD 69 million for the three years combined[166]. Convertible Bonds and Financing - The company extended the maturity date of the convertible bonds multiple times, with the latest extension to January 17, 2022, and the interest rate increased to 10% per annum[43]. - The conversion price of the convertible bonds was revised from HKD 0.34 to HKD 0.221, allowing for the conversion into a maximum of 405,542,986 shares[43]. - The company has issued convertible bonds with a total value of HKD 89,625,000 at an 8% interest rate, which can be converted into shares at a price of HKD 0.359 per share[193]. - The total number of shares to be issued upon full conversion of the convertible bonds has been adjusted to a maximum of 263,602,941 shares at a conversion price of HKD 0.34 per share[194]. - The company has received written consent from bondholders for multiple extensions of the convertible bonds, indicating ongoing support from investors[41]. Employee and Management Compensation - The group employed 73 staff in Hong Kong and China, a decrease from 213 in 2020[53]. - Total employee costs for the review year were approximately HKD 22 million, down from HKD 23 million in 2020[53]. - Employee compensation is determined based on performance, qualifications, experience, position, and current trends[53]. - The remuneration committee consists of four members, with independent non-executive directors holding the majority[93]. - For the fiscal year ending June 30, 2021, the annual remuneration of senior management members was categorized as follows: 1 member in the range of HKD 3,000,001 to HKD 3,500,000, 3 members in the range of HKD 1,000,001 to HKD 1,500,000, and 1 member in the range of HKD 500,001 to HKD 1,000,000, totaling 5 members[94]. Risks and Challenges - The company faced significant risks including trends and regulations in the lottery industry, which could adversely affect operations and financial performance[119]. - The company’s major risks include potential increases in costs due to materials and labor, which could impact profit margins on personal protective equipment products[119]. - The company has developed its "Internet+" services to expand business opportunities, although performance is significantly influenced by industry trends[119]. Acquisition and Related Transactions - The company agreed to acquire 25% equity in a target company for HKD 200 million, with payment linked to the target company's financial performance over the next three years[46]. - The acquisition price will be settled through the issuance of shares, avoiding cash outflow for the company[47]. - The company has a conditional agreement to acquire 25% of the target company's issued share capital, which is contingent upon the completion of the restructuring of the Shenzhen company[152]. - The management service agreement with Guoyao Pharmaceutical requires an annual service fee of RMB 28 million, increasing by 5% each year during its three-year term[145]. - The company’s independent non-executive directors confirmed that the ongoing related party transactions are conducted on normal commercial terms and are fair and reasonable[147].
国药科技股份(08156) - 2021 - 年度财报